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Last December, the Securities and Exchange Commission settled the debate over accounting practices at Fannie Mae, ordering a restatement that could reduce earnings since 2001 by $9 billion. Soon after, Fannie Mae announced the resignation of CFO J. Timothy Howard. Howard, CFO since 1990, oversaw Fannie Mae's complex accounting policies, which the SEC said included the misuse of hedge-accounting techniques and improper accounting for loans.

Surprisingly, however, Wall Street isn't being too hard on him. "I don't think many institutional investors feel cheated," says Matthew Park, a senior analyst at A.G. Edwards. "Tim Howard was convinced that Fannie Mae was trying to deliver steady growth, but interest rates that he could not control were volatile during the recession, and in trying to deliver steady growth, perhaps he overdid it and violated some technical rules." Charles Gabriel, head of Washington research for Prudential Securities, is equally generous. "I can't think of a single client that I talk to who thinks that Tim Howard behaved with fraudulent intent," he says. "I think [former Fannie Mae CEO] Frank Raines and Tim Howard to this day believe they behaved ethically and followed the rules, and are victims of post-Sarbanes-Oxley political righteousness."

Howard, whose resignation is officially viewed as a retirement, stands to walk away with an annual pension of more than $400,000, plus lifetime access to Fannie Mae's medical benefits. He is also owed more than $4 million in stock options. Likewise, Raines, who also retired in December, is due more than $1 million annually for life. The Office of Federal Housing Enterprise Oversight has asked Fannie Mae to delay paying out any benefits until it reviews the lucrative packages.

Sarbox may also play a role in the executives' eventual remuneration, says Andrew Liazos, a partner at McDermott, Will & Emery LLP in Boston. "There is a provision that allows for recapture of certain bonuses and the like that result from a restatement of the financials due to misconduct," he explains. "The contract would almost be irrelevant, because Sarbanes-Oxley would override it." —Kate O'Sullivan

Jail Time for Cosmo?

Now that one of his former bosses faces up to 40 years in prison, ex-CUC International Inc. CFO Cosmo Corigliano could finally receive a criminal sentence of his own in one of the largest fraud cases in U.S. history. The long-running $14 billion accounting scam at CUC, which sold shopping-club memberships, was uncovered after the company merged with franchisor HFS Inc. to become Cendant Corp. Corigliano pleaded guilty to charges of conspiracy and wire fraud in 2000.

But, like so many of his peers, the former finance chief has managed to put off his own sentencing by cooperating with investigators seeking bigger fish. Corigliano's 18 days of testimony helped the jury to convict former Cendant vice chairman E. Kirk Shelton in January on all 12 counts of conspiracy, as well as securities, mail, and wire fraud. But after the seven-month trial and another month of deliberation, the jury was unable to reach agreement on the involvement of former chairman Walter Forbes; that case ended in a mistrial.

Corigliano has already reached a settlement with the Securities and Exchange Commission on civil charges, agreeing to transfer most of his assets to a court-appointed receiver and promising to cease practicing as an accountant or serving as an officer or director of a public company. And now that he's outlived his usefulness as a witness, he will soon likely receive a criminal sentence of up to 10 years in prison. That is, unless the government decides to retry Forbes, in which case the former CFO could enjoy his freedom for a while longer, according to Michael Drewniak, spokesman for the U.S. Attorney's Office in New Jersey. "His sentencing would likely be put off until the second trial is over," says Drewniak. So much for swift justice. — K.O'S.

CFOs on the Move

James H. Hance Jr. has retired as vice chairman of Bank of America after nearly 18 years with the bank and its numerous predecessors.... Kevin Parker has stepped down as co-president and finance chief at PeopleSoft Inc. as Oracle Corp. moves ahead with the acquisition of its former rival.... Peter Darbee takes over the top job at PG&E Corp. He is succeeded as CFO by former SVP and controller Christopher Johns.... Stephen Winslow will head up finance at convenience-store chain Cumberland Farms. Winslow had been CFO at Hasbro's U.S. Toy Group.... Harley-Davidson Inc. has promoted CFO James L. Ziemer to CEO....

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